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Learn inventory from Mr. Miyagi

LAS VEGAS – Any fan of the 1984 movie The Karate Kid remembers the way wise Mr. Miyagi trained young Daniel in karate by having him master basic steps and repeating them over and over.

It can be a lesson to HME providers in the way they manage their inventory, says Brightree’s Ryan McDevitt, who will present a session at Medtrade Spring in March titled “Lean Mean Fighting Machine–How to Get Your Inventory Into Shape.”

Start with the fundamentals of inventory control by evaluating the revenue created by each SKU to create a plan for efficiency and profitability, McDevitt says. Here’s a preview:

HME News: Why do you say so many providers’ inventories are “out of shape?

Ryan McDevitt: Many providers keep a back stock of goods that are “what if I need this?” items. In a respiratory business, that might be a percussor. They’re devices you’ve purchased over time and you might use once a year.

HME: What should providers do with those kinds of items?

McDevitt: One of the things I used in my business as an HME provider is a red tag sale. Go through your inventory from the least dispensed items forward, and tag anything that hasn’t been used in 12 months. Ask yourself, what’s the revenue I’ve been able to create on those items? Have I made my money back to pay for this SKU? If I decide to phase it out, what do I have to lose?

HME: What’s an example of a solution for such inventory practices?

McDevitt: It’s very risky to buy just on price. You have to negotiate prices that make sense for your revenue cycle. You might end up forgoing a vendor relationship that’s lasted years and years that was based on high volume. You can’t do that anymore.

HME: What are the barriers to improving inventory control?

McDevitt: The habits of yesteryear are the biggest obstacles. Being a kid who grew up in Detroit watching what happened to the automobile industry, I understand industries that stay in their old ways, while the world changes around them. It’s about changing your mindset.